Federal Reports

The Office of Inspector General engaged the independent public accounting firm of KPMG LLP (KPMG) to conduct the fiscal year 2025 financial statements audit of the Western Area Power Administration (WAPA), subject to our review. As part of this audit, KPMG considered WAPA’s internal controls over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing its opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of WAPA’s internal control.

KPMG performed the audit in accordance with generally accepted government auditing standards.

During the audit, KPMG identified certain deficiencies in WAPA’s internal control related to the recording of operation and maintenance expenses, purchased power expense, and accounts payable that are included in the management letter. 

The management letter contains two findings and five recommendations that were issued to WAPA during The Western Area Power Administration’s Fiscal Year 2025 Financial Statements Audit. Management concurred with the findings and recommendations and had taken or planned to take corrective actions. Management’s responses are included with each finding.

USGS distributed Earth MRI IIJA funds in accordance with the Act, but it was unable to demonstrate the cooperative agreements met program objectives.

Our Objective(s)

To assess MARAD's risk management and oversight of Port Infrastructure Development Project (PIDP) grants funded through the Investment in Infrastructure and Jobs Act (IIJA). Specifically, we assessed MARAD's policies and procedures in the areas of risk management, oversight, workforce planning, and training. 

Why This Audit

MARAD's PIDP Federal grant program supports the modernization and expansion of port infrastructure across the United States. IIJA greatly increased PIDP funding, adding $2.25 billion over 5 fiscal years beginning in fiscal year 2022. We initiated this audit based on the heightened risks with administering a Federal grant program that receives such a large increase in funding in a short period of time. 

What We Found

MARAD did not apply comprehensive risk management tools to help identify and manage PIDP risks. MARAD began developing a PIDP Process Level Risk Assessment but had not yet used it to test the design and effectiveness of internal controls for PIDP. Additionally, MARAD lacked clear criteria and definitions to assess post award project risks. Gaps in MARAD's policies and procedures diminish their utility for overseeing IIJA-funded PIDP grants. MARAD employees conducting site visits of grantees lacked formal procedures and supervisory review of their findings was not required. The Agency's policies and procedures for reviewing grantee requests for advance and reimbursement of funds were not sufficient and MARAD lacked instructions for review of Federal Financial Reports. MARAD has not updated its Strategic Human Capital plan to address workforce challenges. MARAD has lost a significant number of staff with institutional knowledge while its funding and oversight needs have expanded. MARAD's Strategic Human Capital Plan expired in 2022 and does not account for the Grants Management Team's current workload. MARAD did not provide timely training for its staff to oversee the PIDP. The Agency planned to provide eight eLearning courses to staff and grantees; however, MARAD has not fully implemented that plan. 

Recommendations

We made 8 recommendations to improve MARAD's oversight of PIPD grants.